One of today’s most common economic fallacies is that the soaring stock market is evidence of economic recovery. Nothing could be further from the truth.

Stocks have almost tripled since the 2008 collapse, but that stock growth stems from Federal Reserve money printing (inflation) and near zero interest rates. The Fed’s balance sheet has grown more than fourfold since 2008 — to $4.3 trillion — and was used to prop up the “too big to fails.” That money had to go somewhere.

It has found its way into the stock market because U.S. Treasuries are paying less than the rate of inflation; and corporate bonds, certificates of deposit and other fixed-income products pay even less. This and price inflation (currency devaluation) is fueling the rise, not positive economic growth or common sense.

Stocks are being bought by the banksters and large corporations. Average people aren’t buying them. A study by the Pew Research Center found fewer than half of all Americans (45 percent) own stocks. The number is down from 65 percent in 2002. Individual investors are cashing in their retirement funds just to survive.

Government printing press money distorts economic reality, dilutes morality and is the true source of “income inequality.” Financial speculation rises with the increase in paper money and the general work ethic deteriorates. The something-for-nothing mentality pervades society.

Paper money promotes the “quick buck” syndrome like narcotics peddling and hookers on the streets. Hookers, incidentally, were widespread in the Weimar Republic in Germany in 1923 because the women had to sell their bodies for food for themselves and their families.

In a paper money society, the social order visibly deteriorates. The morality of the stable gold standard gradually changes to the amorality of fiat. Few people see the cause and effect, and the politicians try to legislate human behavior. They always fail, as the system is overrun with jails and prisons.

Fiat promotes an illusory reality where non-substance like financial speculation and gambling replaces the substance of industrial production and long-term value. When consumption surpasses income, as the government and the politicians promote, distorted human emotions replace stable behavior. Social breakdown increases, and real values are forgotten.

Prices of labor and craftsmen escalate beyond all reason when there is never enough money. Service repairmen charge fees like medical doctors.

When labor and supplies are valued in fiat, everything becomes distorted. In the final stages of hyperinflation, there is no anchor to sanity and common sense.

Paper money expands consumption way beyond income. This eventually guarantees debt collapse and social breakdown. The foundation of the household collapses and the middle class is destroyed. Paper money is an illusion because it is non-substance and can be created by the government to infinity. When the people accept numbers on green strips of paper or computer symbols for money, they accept illusion for reality. They accept non-substance for substance. Real money (gold and silver) comes from the earth and human production. It is no illusion.

As paper currencies come to their end, governments greatly step up suppression of the people. They start foreign wars. They attack their own population with high-sounding hypocrisy. Government makes criminals out of honest men–“in the public interest,” of course.

What follows? Default of the United States? Not formally, but by stealth depreciation of the currency (inflation). Will the U.S. world system hold? Yes, as long as world fear factor dominates as a result of superior military power. But that fear factor seems to be slipping as the elites behind the scenes use Russia and China to create a system outside the dollar.

Sober people (there are a few) understand monetary realism — to wit, that fiat implies stealth (slow) default. No payment is ever intended and is impossible even if intended. The main feature or attribute of sovereign debt default is gradualism.The public cannot grasp gradualism even as they are impoverished. The debt propaganda — that the U.S. owes debt — is a cover for the fiat regime. It’s a hoax! How can the U.S. owe a “debt” when it can print money to infinity?

A fiat paper money regime always becomes autocratic or fascist toward the last days of its existence. This is the time when the state makes war on its own people. Most never know it because it is not announced, but hidden in propaganda within such terms as “for the common good.”

An unlimited supply of paper money buys sophisticated arms that create fear and the propaganda to manipulate the people against their personal freedom and best interest. Fiat paper money is tyranny or becomes tyranny. It guarantees criminal government.

Paper money, personal freedom and privacy are incompatible. Paper money centralizes power to the state and diminishes the individual. This is the first cause of all you see happening. All modern wars are paper money wars. Paper money pays the politicians their lavish profligacy, and they keep their mouths shut about the fiat system.

The only way for true economic growth is by the transfer of services, goods or wealth between people (or businesses) who actually produce something. In other words, if someone provides a service and gets gold or silver (actual wealth) or widgets for compensation, both the service provider and widget maker have benefited and each has something that has bettered his standard of living.

If the one who performed the service uses the widgets to acquire trinkets that help him perform his service, then the service performer has benefited. The trinket maker has also benefited, and he can put the widgets to use. This sort of transfer has worked from the beginning of time, when the farmer took his produce to market, where it was sold or bartered in exchange for wealth, tools, supplies and seeds so he could begin producing food for next year.

But the Fed produces nothing but more paper money, and it takes from the producers. Therefore, its only solution for the collapsing financial system is to steal wealth from the producers of goods and services through taxation and provide more and more fiat money and credit. This can only mean final and complete collapse of the U.S. dollar.

A second and primary concern of the Fed is its control of public perceptions. The Fed must keep the crowd quiet. It positively does not want a panic and run on the banks. The very last thing central banks want is transparency. The vested interest (the paper money crowd) will color the news more and more.

Everyone should be aware of this and move as much as possible out of the dollar. As I told readers of my monthly newsletter, The Bob Livingston Letter in the latest issue, silver is a great buy and hold now! The more downward manipulation the banks do, the more they load up on physical silver and, ironically, the better the suppressed price is for public investors.

If you talk silver with the masses, expect them to scoff. Most people don’t know that silver was the best-performing asset in the world through the silver price highs of 2011.

So what’s wrong? The price is being manipulated down by just eight traders on the COMEX, led by JPMorgan. This is a crooked paper game that cannot last. What they are doing is setting up silver for an explosion in price. This event will reveal the worthlessness of paper money.

The long dry spell because of manipulation in silver has caused extreme underappreciation. Public sentiment is negative to the extreme. “Blood is in the street.”

The only negative is time. No one knows when silver will blast off, so this uncertainty has kept investors from buying. But some of us see this as the perfect opportunity to buy more.

I still like U.S. 90 percent silver coins minted before 1965. They can be purchased in bags of $1,000 face amount or in smaller increments — even individually. (Find a local, reputable coin dealer with a good rating with the Better Business Bureau and a history in the community.) Buy for great price explosion upward as well as for survival coins. As paper money fails, a silver dollar will buy a week’s groceries any time.